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Wednesday, March 16, 2011

Press reports indicate that Commerce Secretary Gary Locke is expected to become the next US ambassador to China, taking over for Jon Huntsman. In a March 9 press release, President Obama stated

In replacing Ambassador Huntsman, I can think of nobody who is more qualified than Gary Locke. More than 100 years ago, Gary’s grandfather left China on a steamship bound for America, where he worked as a domestic servant in Washington State. A century later, his grandson will return to China as America’s top diplomat.

[A]s Commerce Secretary, Gary oversaw a Census process that ended on time and under budget, returning $2 billion to American taxpayers. He’s earned the trust of business leaders across America by listening to their concerns, making it easier for them to export their goods abroad, and dramatically reducing the time it takes to get a patent. When he’s in Beijing, I know that American companies will be able to count on him to represent their interests in front of China’s top leaders.

Locke enjoys overwhelming support from various groups, and is expected to breeze through the confirmation process.

Tuesday, March 15, 2011

BP's CASTROL motor oil products are distributed in a unique bottle design for which BP received a design patent. The patent expired in 2005, but BP continued to mark its bottles with the patent numbers. Respondent Thomas A. Simonian (a patent attorney) filed a qui tam relator complaint under 35 U.S.C. §292.

BP attempted to dismiss Simonian's complaint in the district court under FRCP Rule 9(b), which provides:

In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, in-tent, knowledge, and other conditions of a person’s mind may be alleged generally.

When the district court concluded the complaint stated an actionable claim, BP petitioned the Federal Circuit for a writ of mandamus seeking to dismiss the complaint. The Fed. Cir. granted the petition in this regard, noting that FRCP Rule 9(b)'s particularity requirement for false marking was "one of first impression for this court."

Simonian's complaint asserted mostly "upon information and belief" that: (1) BP knew or should have known that the patent expired; (2) BP is a sophisticated company and has experience applying for, obtaining, and litigating patents; and (3) BP marked the CASTROL products with the patent numbers for the purpose of deceiving the public and its competitors into believing that something contained or embodied in the products is covered or protected by the expired patent.

The Federal Circuit found this sort of pleading deficient:

A plaintiff is not empowered under the Rules “to plead the bare elements of his cause of action, affix the label ‘general allegation,’ and expect his complaint to survive a motion to dismiss.” . . . Instead, a complaint must in the § 292 context provide some objective indication to reasonably infer that the defendant was aware that the patent expired . . . Because the relator’s complaint here provided only generalized allegations rather than specific underlying facts from which we can reasonably infer the requisite intent, the complaint failed to meet the requirements of Rule 9(b).

* * *

First, relator contends that asserting in the complaint that BP is a “sophisticated company and has experience applying for, obtaining, and litigating patents” is enough under Rule 9(b). This court disagrees. That bare assertion provides no more of a basis to reasonably distinguish a viable complaint than merely asserting the defendant should have known the patent expired. Conclusory allegations such as this are not entitled to an assumption of truth at any stage in litigation.

Second, relator contends that a false marking inherently shows scienter. This argument is also unpersuasive. In Merck & Co., v. Reynolds, 130 S. Ct. 1784, 1793 (2010), the Supreme Court stated “[w]e recognize that certain statements are such that, to show them false, is normally to show scienter.” The Court gave as an example one claiming “I am not married” when in fact the person is married. Id. However, in other contexts where the relationship between factual falsity and state of mind is not nearly as apparent, Merck rejected this proposition. Id. This situation clearly falls into the latter category, requiring more than a mere statement.

Third, relator contends that unlike the inequitable conduct claim featured in Exergen, false marking is “anonymous” and is not an individualized fraud. . . . Overlooked by the relator is that the naming of specific individuals is not the only way to set forth facts upon which intent to deceive can be reasonably inferred. In an amicus brief, the United States points out that a relator can, for example, allege that the defendant sued a third party for infringement of the patent after the patent expired or made multiple revisions of the marking after expiration. None of these or similar assertions are present in the complaint here.

Monday, March 07, 2011

In 2008-2009, the Federal Trade Commission (FTC) held 8 days of hearings across the country on the U.S. patent system and its effect on innovation. After compiling public comments and conducting additional research, the FTC released a new report today titled The Evolving IP Marketplace: Aligning Patent Notice and Remedies With Competition: A Report of the Federal Trade Commission.

The report supplements the earlier (2003) report titled To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy, and continues to maintain many of the criticisms of the patent system, namely, (1) too many patents are ambiguous, (2) too many patents have an indeterminate scope, (3) too many patentees are exploiting the courts solely for monetary purposes, and (4) too many infringers are paying "excessive" awards.

A fair amount of the 2011 report is a bit "old hat" in that it rehashes the same issues discussed in the 2003 report. However, the new report places a greater focus on patent "notice" and asks for a much harder line on patentees in the area of section 112 and on defining claim scope.

Some of the recommendations are benign

"[i]n assessing indefiniteness, the PTO should adhere to the principle articulated in Miyazaki,"

but then slide into the slightly odd

"patent applicants [should] be required either (i) to designate a dictionary for use in assigning meaning to terms not defined in the application or (ii) to acknowledge acceptance of a PTO designated default dictionary for that purpose,"

and ultimately the really odd:

"[d]eterminations regarding whether a disclosure requires undue experimentation should give recognition to the competitive significance of the time required for experimentation; when product life-cycles are short, greater disclosures may be needed in order to be competitively meaningful."

As before, the FTC is urging that the USPTO to employ more "Rule 105" Requirements for Information (see MPEP 704.10), which allows the PTO to require the submission of information “reasonably necessary to properly examine or treat the matter” and also require information “reasonably calculated to lead to such relevant information."

On the damages side, the FTC again calls for a "prior art subtraction" in damages, and also recommends the application of a "prior use" (or "intervening rights") defense in the cases of continuations. Also, instead of prohibiting continuations outright, the FTC recommends

[T]he enactment of legislation to protect from infringement actions third parties who (i) infringe patents only because of claim amendments (or new claims) following a continuation and (ii) developed, used, or made substantial preparation for using, the relevant product or process before the amended (or newly added) claims were published.

Of course, there are many proposals in this report that are sure to spark considerable debate. One interesting side note is that the FTC has altered its nomenclature to distinguish between NPE's and "patent assertion entities":

This report uses the term “patent assertion entity” rather than the more common “non-practicing entity” (NPE) to refer to firms whose business model focuses on purchasing and asserting patents. Taken literally, the term NPE encompasses patent owners that primarily seek to develop and transfer technology, such as universities and semiconductor design houses. Patent assertion entities do not include this latter group.

Needless to say, the FTC is not a big fan of PAEs:

The business model of PAEs focuses on purchasing and asserting patents against manufacturers already using the technology, rather than developing and transferring technology. Some argue that PAEs encourage innovation by compensating inventors, but this argument ignores the fact that invention is only the first step in a long process of innovation. Even if PAEs arguably encourage invention, they can deter innovation by raising costs and risks without making a technological contribution.

Thursday, March 03, 2011

Yesterday, Colorado senators Mark Udall and Michael Bennet slipped in an amendment to S.23, authorizing the USPTO to create "three or more" regional satellite patent offices across the country in the next three years. The Senate passed the amendment on a voice vote. As a side note (and by sheer coincidence), the PTO passed over Denver and selected Detroit for its first satellite office back in December.

Debate on patent reform continues today in the Senate, and a vote is expected shortly after. Between February 28 and March 2, twenty-nine amendments have been proposed for the legislation, with more likely to follow. To view the amendments to date, see here (link) and here (link).

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About Me

Peter is a patent attorney practicing with a general-practice firm in the Chicago area. He handles a diverse intellectual property practice in the electrical, computer and software fields for leading technology companies located throughout the world, as well as for local and national start-ups and business ventures. He works closely with established and emerging-growth companies to implement successful patenting and litigation strategies. He is also a former patent examiner with the USPTO, and sincerely hopes you won't hold that against him.

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